Full Judgment Text
2023:DHC:2023
* IN THE HIGH COURT OF DELHI AT NEW DELHI
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Reserved on: 09 December, 2022
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Pronounced on: 21 March, 2023
+ CS(COMM) 406/2020
WORKNEST BUSINESS CENTRE LLP & ANR. ..... Plaintiffs
Through: Mr. Sachin Gupta, Ms. Jasleen Kaur,
Ms. Swati Meena and Ms. Yushi
Agrawal, Advocates.
versus
MS WORKNESTS THROUGH SH RAJESH GOYAL ..... Defendant
Through: Mr. Sanjoy Kr. Ghosh and Ms. Rupali
Ghosh, Advocates.
CORAM:
HON’BLE MR. JUSTICE SANJEEV NARULA
J U D G M E N T
SANJEEV NARULA, J.
I.A. No. 8773/2020 (u/Order XXXIX Rules 1 & 2 r/w Section 151 of the
Code of Civil Procedure, 1908)
1. Plaintiff No. 2 – Mr. Prithvi Raj Batra, the founder of Plaintiff No. 1
firm namely, Worknest Business Centre LLP, is the registered owner of
device mark/ logo “
” in classes 35 and 36, which is associated
with real estate advertising, marketing, financing, investment, consultancy
and other related services [ hereinafter, “ Plaintiffs’ registered mark ”].
Plaintiffs seek an interim injunction against Defendants’ use of the mark
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“WORKNESTS” and domain name “www.worknests.com”, pending final
adjudication of the suit.
FACTS SET OUT IN THE PLEADINGS
2. In 2018, Mr. Prithvi Raj Batra coined the term “WORKNEST” with
an aim to offer co-working spaces to budding businesses, freelancers etc. at
affordable prices. Presently, they are running their business in Noida, Uttar
Pradesh, but intend to expand pan-India and develop multiple co-working
spaces in the coming years. The device mark “
” was entered into the
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register on 15 December, 2018, with deemed date of registration as 16
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June 2018 in the name of Plaintiff No. 2 in classes 35 and 36. These
registrations are operative pan-India, without any imposition of disclaimer/
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condition/ limitation thereon. On 11 October, 2020, Plaintiff No. 2 filed an
application for registration of word mark “WORKNEST” in class 36,
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claiming use since 21 April, 2018, which is currently pending.
3. Plaintiffs have expended over Rs. 5 crores in developing co-working
spaces under the name “WORKNEST” and have acquired tremendous
goodwill and reputation in the industry, owing to world-class facilities
provided by them. In order to garner more customers, they created a website
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with domain name “www.worknest.co.in”, which has been in use since 21
April, 2018. In September, 2020, Plaintiffs first learnt of Defendants’
impugned website when their property consultant enquired about the rates of
1
Under application Nos. 3861870 and 3861871, respectively.
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their Worknest Kolkata property. They subsequently conducted an online
search and discovered that Defendants are lending co-working spaces under
a nearly identical mark – “WORKNESTS”.
4. Defendants, on the other hand, claim to be well-renowned and
established providers of real estate rental services, rental offices for co-
working, brokerage, leasing and management of commercial property,
consultancy services in respect of property investment and real estate etc.
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They contended that on 08 January, 2018, Mr. Rajesh Goyal [Director of
Defendant No. 1 – WN Space Solutions P. Ltd.] conceptualised and adopted
the brand/ trademark “WORKNESTS” and the logo “
” for their
business of providing co-working spaces in Kolkata. The mark “
” is
registered in favour of one GFS Consultancy Private Limited and jointly
used by Defendant No. 1 [WN Space Solutions Pvt. Ltd.] and Defendant No.
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2 [M/s Worknests Projects], with the registered propreitor’s consent.
PLAINTIFFS’ OPENING CONTENTIONS
5. Mr. Sachin Gupta, counsel for Plaintiffs, argued that the impugned
mark is phonetically, visually, structurally, and conceptually similar to
Plaintiffs’ registered mark. The conflicting marks are identical, used for
identical services, and target the same set of customers; there is a strong
likelihood of public confusion and thus, infringement is clearly made out.
2
Bearing application No. 4697051.
3
The mark is registered under application No. 4060039.
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The test is not to compare the marks side-by-side but to see the overall
impression conveyed to a person with average intelligence and imperfect
recollection. Defendants’ impugned use is bound to cause confusion and
mislead the public and thus, plainly infringes Plaintiffs’ registered mark,
which was adopted and registered prior to Defendants’ mark. Once
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infringement is established, injunction must follow.
DEFENDANTS’ CONTENTIONS
6. Mr. Sanjoy Kr. Ghosh, counsel for Defendants, raised following
defences:
6.1 Defendants have been using the mark “WORKNESTS” with the
impugned logo since September, 2018 i.e., prior to Plaintiffs’ use of their
device mark “
”.
6.2 Plaintiffs’ use since 2018 is unsubstantiated by any documentary
evidence. The earliest document indicating use of Plaintiffs’ registered mark
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is the Office Agreement dated 28 January, 2019. They have purposely not
produced their balance sheet for the financial year 2018-19, which alone
could illustrate the commercial use and quantum of business conducted in
the said year.
6.3 Since the implementation of the Central Goods and Services Tax Act,
2017 and respective States’ Goods and Services Tax laws, it is mandatory to
obtain Goods and Services Tax [“ GST ”] registration before commencement
4
He relied on Midas Hygiene v. Sudhir Bhatia , (2004) 3 SCC 90.
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of any business. Plaintiffs obtained their GST registration on 11 January,
2019 and thus, their market existence or business before the said date is not
probable.
6.4 Before adopting the trademark “WORKNESTS” in 2018, Defendants
conducted an extensive and thorough search of trade channels for similar
mark(s). Finding no trace of use of any similar mark, they honestly adopted
the impugned mark and began using the same for their services. They started
commercial operations under the impugned mark in September, 2018, which
is evident from exchange of proposals for renting out of properties with
Godrej Properties Ltd., which eventually culminated into an agreement with
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them on 29 November, 2018.
6.5 Defendants’ commercial use is earlier to Plaintiffs. They even secured
GST, PAN and TAN registrations in the period between September, 2018-
February, 2019, before the Plaintiffs. Further, Defendant No. 2 was
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sanctioned a business loan by Axis Bank on 31 December, 2018. The
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impugned domain name – “worknests.com” was also registered on 27 July,
2018.
6.6 Defendants are not using the name “WORKNESTS” independently,
but in conjunction with the registered mark “
”, making the resulting
mark inherently distinct from Plaintiff’s device mark “
”, which has
to be seen as a whole. Plaintiffs do not have any right over the word
“WORKNEST” separately and as such, no case for infringement is made
out. It is in fact the Plaintiffs who have copied tradename “WORKNESTS”
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with a minor change of deleting alphabet ‘ S ’ at the end.
6.7 Defendants are exclusively conducting their business in Kolkata,
West Bengal and do not intend to extend business operations beyond the
States of Orissa, Assam and West Bengal. Whereas, Plaintiffs do not have
any presence outside Noida, Uttar Pradesh. Hence, no prejudice or
irreparable loss/ injury is being caused to Plaintiffs, which warrants grant of
interim relief.
REJOINDER SUBMISSIONS
7. Mr. Gupta controverted the afore-noted submissions of Mr. Ghosh,
contending as follows:
7.1 Plaintiffs’ registrations, although on a proposed-to-be-used basis, date
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back to 16 June, 2018 in terms of Section 23 of the Trademarks Act, 1999
[ hereinafter, “ the Act ”]. Defendants’ assertion of use since September, 2018
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is incorrect and, in any event, not prior to Plaintiffs’ date of registration (16
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June, 2018).
7.2 Defendants have wrongly limited the meaning of ‘use’ to actual
commencement of business. Their reliance on the GST certificate to contend
that the Plaintiffs could not have used the mark prior to January, 2019 is
misplaced and refuted by the documents placed on record. Nonetheless,
registration of Plaintiffs’ domain name “www.worknest.co.in” in April,
2018 must also be deemed to be use of the mark “WORKNEST” by
Plaintiffs.
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To argue that Defendants are not prior users, Plaintiff relied on Pfizer Products Inc. v. Rajesh Chopra
and Ors., 2007 SCC OnLine Del 868, Kamat Hotels (India) Ltd. v. Royal Orchid and Anr., 2011 SCC
OnLine Bom 460 and Drums Food International Pvt. Ltd. v. Euro Ice Cream and Anr., 2011 SCC
OnLine Bom 817.
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7.3 Defendants are not honest and concurrent users. They were aware of
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Plaintiffs’ existence as is evident from WhatsApp communication dated 27
July, 2018 between them which mentions that “worknest.com” domain is
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blocked. Malafide and dishonesty in adoption is furthered by the fact that
Defendants did not file any trademark application for registration of the
impugned mark; the mark “
” is registered in the name of a third-party
viz. GFS Consultancy P. Ltd. They deliberately sought registration of “WN”
logo instead of “WORKNESTS” as they knew that “WORKNESTS” would
not be registered due to Plaintiffs’ prior registration. Even otherwise, honest
and concurrent use is a ground for seeking registration of a mark, and not a
defence available in trademark infringement suit.
7.4 If injunction is not granted, it would amount to deemed registration of
Defendants’ mark, which does not exists, rendering Plaintiffs’ registration
redundant, without any cancellation proceedings.
PROCEEDINGS THIS FAR
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8. On 30 September, 2020, while issuing notice, the Court declined to
grant an ad-interim injunction for the following reasons:
“ xxx - xxx
10. Learned counsel for the defendant further submits that the defendant’s
exclusive work is in Kolkata and that the defendant is using the mark
WORKNESTS alongwith its logo and not separately as is evident from the website
of the defendant and thus there is clear distinction between the two marks.
11. Learned counsel for the plaintiff contends that since the label mark of the
plaintiff also contains the word WORKNEST, whereas the defendant’s registered
mark is only ‘WN’, the action of the defendant would amount to infringement of the
plaintiff's trademark WORKNEST which is duly registered.
12. Considering the fact that the plaintiff and defendant appear to be
6
Bal Pharma v. Centaur Lab , SCC OnLine Bom 1176.
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concurrent users of the mark WORKNEST plaintiff being registered owner of the
mark/label mark
and defendant label mark
and
and using
WORKNESTS along with its logo
everywhere and at the moment
the plaintiff is operating in Noida and the defendant is working in Kolkata, both
are providing co-working spaces in different areas, at this stage this Court finds no
ground to grant an ad interim injunction.”
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9. Later, on 18 April, 2022, while hearing arguments in the present
application, the following order was passed:
“12. The issue in this case relates to the trademark ‘WORKNEST’ of the
Plaintiffs and ‘WORKNESTS’ of the Defendant, both as a mark and as a name in
respect of `co-working spaces’. The Plaintiffs have a co-working space
establishment in Noida, while the Defendant has a co-working establishment in
Kolkata. The mark and services being identical, the question between the two
parties, is as to who is the prior user and prior adopter of the mark/name.
13. A detailed chart has been placed on record by the Defendant depicting
their use of the mark ‘WORKNESTS’, as against the dates of the Plaintiffs’ usage
of the mark ‘WORKNEST’. The Plaintiffs claim prior user on the basis of
registration of the domain name www.worknest.co.in on 21st April, 2018 in the
name of a group company and the registration of the mark ‘WORKNEST’ in a logo
form in the name of Mr. Prithvi Raj Batra - Plaintiff No.2. The Defendant, on the
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other hand, claims prior user on the basis of GST registration in 7 December,
2018 and incorporation of the corporate entities prior to that of the Plaintiff No.1.
The turnover figures of both the parties have not yet been placed on record.
14. This matter requires examination as to who would be construed as a
“prior user” of the mark and as to whether the Plaintiffs enjoy statutory rights in
the mark which was registered by Plaintiff No.2 on a proposed to be used basis .
Accordingly, the parties are directed to place on record their turnover figures,
since the date of the adoption of the present marks till date, along with the GST
records/ payments made by them to third parties, in order to assess the extent of
business of both the parties.
15. In the meantime, since there may be actual confusion being created in
the market as the marks are identical and services which are being provided are
identical, it is directed that the Defendant shall not extend beyond the state of
West Bengal, till the next date of hearing. ”
[Emphasis Supplied]
ANALYSIS
10. Undisputedly, the Defendants are using the impugned mark
“WORKNESTS” in trademark sense, therefore, the Court has to only assess
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whether such use prima facie amounts to infringement and passing off
Plaintiffs’ trademark “
” . First, we shall evaluate deceptive
similarity, the main ingredient of infringement, having regard to the extent
of resemblance between the two marks, similarity of goods and services
associated, comparability of trade channels employed by parties, their
reputation and potential to deceive or confuse relevant consumers.
Thereafter, the Court will decide on Plaintiffs’ assertion of prior registration
vis-à-vis Defendants’ claim of prior use.
WHETHER THE TWO MARKS ARE SIMILAR
11. The key factor in ascertaining deceptive similarity is the likelihood of
confusion. The underlying principle is to protect consumers from being
misled or confused and to safeguard the distinctiveness and reputation of a
brand or creative work. Likelihood of confusion is usually assessed keeping
in view the sound, meaning, overall impression and commercial impact
delivered by the rival marks. In the instant case, the two marks and their
manner of use is depicted below:
| PLAINTIFFS | DEFENDANTS |
|---|---|
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12. Plaintiff’s trademark is a composite device mark, which must be
viewed as a complete unit. However, for assessment of similarities between
the contesting marks, one has to focus on the dominant characteristics. Here,
the word “WORKNEST” emerges as the distinctive feature, holding
prominence. This element attracts one’s immediate attention and is most
likely to be remembered by the consumers and the general public. It is thus,
a brand-identifier. Therefore, the marks are identical, except with the
difference of addition of the letter ‘ S ’ at the end of Defendants’ mark, which
is not sufficient for distinguishing the challenged mark from that of
Plaintiffs’. The impugned mark bears overall similarity to Plaintiffs’ mark
and is likely to deceive an ordinary person, who is familiar with the former
mark, into believing it to be the latter party’s mark. Dissimilarities in
isolated facets of the marks, including the logos, as highlighted by
Defendants, are insignificant and immaterial. The likelihood of confusion is
further fortified by the fact that services offered by parties under their
respective marks (renting of co-working spaces and other real estate
services), are also identical. Both the parties would naturally have the same
distribution networks for offering their services and thus, are more likely to
be encountered by the same set of consumers, thereby increasing the
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possibility of confusion between the marks.
13. Therefore, notwithstanding the differences, “WORKNEST” is the
significant and indispensable component of Plaintiff’s registered mark,
which makes the contested mark to be deceptively similar/ identical thereto.
WHO IS THE PRIOR USER ?
14. As the marks bear similarity, the relief now hinges on determining
which of the two parties began using their mark before the other.
15. Plaintiffs’ application was on a proposed-to-be-used basis thereby
implying that the mark had not been put to commercial use as on the date of
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application. They first actually utilised their mark “WORKNEST” on 21
April, 2018, when their domain name “www.worknest.co.in” was registered
in the name of Plaintiff’s sister concern – Buniyad Retail P. Ltd. Thereafter,
Plaintiff No. 2 initiated the registration process for the mark “
”
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on 16 June, 2018, by filing an application. From the material available on
record, it appears that commercial transactions under said mark were
commenced by Plaintiffs in and around December, 2018-January, 2019. In
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contrast, Defendants commenced using the impugned mark later than 16
June, 2018, but resist the injunction by asserting that their commercial use
since September, 2018, is prior to Plaintiffs’.
16. Thus, the key question is whether the rights of a registered proprietor,
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who acquired registration for a mark planned for future utilisation, can be
nullified by someone who deployed a similar mark after the registration
date, but prior to the date of actual use of the registered proprietor.
17. In accordance with Section 18(1) of the Act, trademark proprietors
can apply for registration if they wish to protect their mark, regardless of
whether the mark is presently in use or planned for future use. The
trademark owner must demonstrate actual use to maintain the registration,
however, that is not the case here as the Plaintiff’s mark is concededly in
use. Defendants have not challenged Plaintiffs’ registration and therefore, no
further discussion is required thereon.
18. Plaintiffs’ mark is registered, which grants exclusive proprietary
rights and establishes a legal presumption of validity and ownership in their
favour. This also prompts the application of provisions under the Act
concerning the impact of registration, as well as the remedies available for
infringement. Section 27(1) of the Act provides that no person is entitled to
institute any proceedings to prevent or recover damages for infringement of
an unregistered trademark. Under Section 28, registered proprietor of the
trademark is vested with exclusive right to use the trademark in relation to
goods or services in respect of which the registration is granted, and to
obtain relief in case of infringement. The registered proprietor can initiate
legal proceedings for infringement, without actual use of the registered
mark.
19. The aforesaid rights of a registered proprietor are however, not
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unassailable. The prior user’s rights, derived from common law, are
recognised as superior to rights arising from a subsequent registration.
Therefore, if Defendants wish to take aid of the defence of ‘prior use’, they
would have to satisfy the test enumerated in Section 34 of the Act that
provides for saving of vested rights of a prior user. The said provision reads
as under:
“ 34. Saving for vested rights —Nothing in this Act shall entitle the proprietor
or a registered user of registered trade mark to interfere with or restrain the
use by any person of a trade mark identical with or nearly resembling it in
relation to goods or services in relation to which that person or a predecessor
in title of his has continuously used that trade mark from a date prior—
(a) to the use of the first-mentioned trade mark in relation to those goods or
services by the proprietor or a predecessor in title of his; or
(b) to the date of registration of the first-mentioned trade mark in respect of
those goods or services in the name of the proprietor of a predecessor in title of
his;
whichever is the earlier, and the Registrar shall not refuse (on such use being
proved) to register the second mentioned trade mark by reason only of the
registration of the first-mentioned trade mark. ”
20. The exception carved out by the above-noted section overrides the
other provisions of the Act and prevents a user of a registered mark from
interfering with the prior use of an identical mark. It begins with a non-
obstante clause and provides for defeasance of rights of a registered
proprietor/ user of a trademark, if any person has been continuously using a
trademark that is identical with or nearly resembles the registered
proprietor’s trademark, from a date prior to the use of the registered
proprietor’s mark in relation to those goods or services, or the date of
registration of the registered proprietor’s mark in respect of those goods or
services, ‘whichever is earlier’. The relevant date for the purpose of
establishing prior use in the present case would be the ‘date of registration’
of the mark and not when the Plaintiff actually started using it. In terms of
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Section 23(1) of the Act, date of filing of registration application is deemed
to be the date of registration. Thus, for proving prior use it is incumbent
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upon Defendants to satisfy usage before 16 June, 2018 (Plaintiffs’
registration date). On this count, they have failed as admittedly Defendants’
use commenced from September, 2018, and not anytime earlier.
21. Defendants have attempted to portray that after securing registration,
Plaintiffs did not have an intention to use the mark “
” as they did
not put the same to immediate commercial use. This again, would not be
enough to defeat Plaintiffs’ statutory rights emanating from registration. If
Defendants’ case is accepted, it would render the concept of proposed-to-be-
used registrations envisaged under Section 18 of the Act, virtually
redundant. It is natural for a prospective registrant to await the outcome on
registration application before proceeding to incur substantial expenses
towards trading under the applied mark. Plaintiff No. 2 herein was issued a
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registration certificate on 15 December, 2018, which related back to 16
June, 2018. The documents submitted by Plaintiff such as their GST
registration, Office Agreement, invoices pertaining to the period around
January, 2019, after Plaintiff No. 2’s registration, prove that they were
interested to commercially use the registered mark. Per contra, Defendants
adopted the mark after Plaintiff No. 2’s applications had been advertised for
public knowledge and were open to objections. Defendants’ adoption and
user of the impugned mark “WORKNESTS” subsequent to Plaintiff’s
registration will not override the Plaintiffs’ statutory rights. If this is
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allowed, it would result in anomaly and permit any person to start using a
similar/ identical mark at any time after the registered proprietor’s mark is
advertised, and before registration is granted. Often due to procedural
formalities and oppositions, final decisions on the applications are rendered
after years from the date of application. A person who adopts deceptively
similar or identical mark within this timeframe cannot be accepted as a prior
user and accorded preferential rights. Allowing this defence would be
wholly contrary to the object and intent of Section 18(1), rendering the same
otiose. It would also discourage registrations as well as adversely impact
rights of registered proprietors. Thus, the defence of prior use under Section
34 of the Act is not available to Defendants.
22. Defendants have also claimed that their adoption is honest and that
they were unaware of Plaintiffs’ existence and their mark. The Court,
however, remains unconvinced. Plaintiffs’ applications No. 3861870 and
3861871 for the mark “
” in classes 35 and 36, respectively, were
accepted by the Trademarks Registrar and published in Journal No. 1860-0
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on 30 July, 2018. It is Defendants’ own case that they inspected the trade
channels before initiating use under the mark in September, 2018.
Considering the fact that the two marks are identical and used for the same
class of goods, if the Defendants had indeed diligently examined the
Trademarks Registry’s records, they would have surely noticed Plaintiff No.
2’s aforesaid applications, which had been accepted and advertised in July,
2018, i.e ., prior to Defendant’s date of adoption. The assertion and defence
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of honest adoption of the mark “WORKNESTS”, sans any credible material
bears no merit.
23. At this juncture, it would also be beneficial to note that application for
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” filed on 18 January, 2019 was also made on a proposed-to-be-used
“
basis. Further, filing of application Nos. 4888922, 4888921 and 4888920 for
marks “WORKNESTS”, “
” and “
”,
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respectively, by Defendant No. 2 on 03 March, 2021, i.e., after filing of the
present suit, also does not tilt the scales of balance of convenience in their
favour. The Court cannot assume Defendants’ use as bonafide and honest to
deny injunctive relief to the Plaintiffs.
24. Lastly, the submission that Defendants’ impugned use does not harm
or injure Plaintiffs as Defendants are based in Kolkata, West Bengal, is
incorrect and misconceived. Registration in favour of Plaintiff is not
confined to any particular area/ State, and solely because Plaintiffs are
currently operating in Noida, Uttar Pradesh alone, the Court cannot restrict
the ambit of their vested rights and impede expansion of future business
activities.
CONCLUSION AND RELIEF
25. To be a prior user, it is obligatory for Defendants to prove that their
use precedes either the date of Plaintiffs’ use or the date of registration of
Plaintiffs’ mark, whichever is earlier. Defendants have failed to satisfy the
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Court that their use preceded Plaintiffs’ registration and thus, their
subsequent adoption cannot defeat the rights vested in Plaintiffs by virtue of
their registration. Plaintiffs have prima facie demonstrated infringement and
are entitled to restrain the Defendants’ use of identical/ deceptively similar
mark “WORKNESTS” for identical services. The balance of convenience
lies in favour of the Plaintiffs and irreparable damage would be caused to
their business in case Defendants are not restrained by way of an injunction.
26. Accordingly, an injunction is granted in favour of the Plaintiffs
restraining Defendants and anybody acting on their behalf from
renting/selling, offering for rent/sale, franchising, licensing, advertising,
directly or indirectly dealing in real estate services, including, providing/
renting out co-working spaces under the “WORKNESTS” mark/ trade name
and domain name “www.worknests.com” or using any other trade name,
mark and domain name that may be deceptively similar to Plaintiffs’ trade
name, “WORKNEST” and “
” marks, domain name
“www.worknest.co.in” that amounts to infringement thereof.
27. With the above directions, the present application is allowed.
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28. List on 21 April, 2023 for framing of issues and case management.
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29. Registry is directed to rectify the cause-title in terms of the amended
plaint.
SANJEEV NARULA, J
MARCH 21, 2023
as/ d.negi
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